Next round of aid pegged at $40 billion

House action expected Thursday

By

WilliamL. Watts

WASHINGTON (MarketWatch) -- The White House will ask Congress this week for another $40 billion or more in emergency spending in response to the devastation caused by Hurricane Katrina, the Senate's top Democrat said Tuesday following a meeting between congressional leaders and President Bush.

Senate Minority Leader Harry Reid, D-Nev., said White House budget director Josh Bolten would be delivering a supplemental request in the next 24 hours.

"I tried to pin him down as to the number. I don't know what that will be, but I would guess it will be around $40 billion to $50 billion," Reid said, adding that further funds would likely be needed later.

House Republican leaders targeted Thursday for action on the bill.

Bush later sent Cabinet members to Capitol Hill to brief House members on the relief efforts. Afterward, House Majority Leader Tom DeLay, R-Texas, told reporters that a number of ideas were aired, from forgiving mortgages to providing temporary housing.

DeLay didn't specify what was likely to be included in any upcoming package.

"There is a lot in the mix. Now some of these things would take policy changes by us, and we're working with the administration and others to make those, and we'll start passing those bills tomorrow," DeLay said.

Congress returned early last week from its annual August recess to approve $10.5 billion in aid, which congressional leaders noted at the time would only serve as a so-called down payment on recovery efforts.

Bush met Tuesday afternoon with top House and Senate lawmakers. An unidentified congressional official told the Associated Press that the president would seek $40 billion for the next phase of relief and recovery efforts.

DeLay said the legislation would aim to eliminate bureaucratic tangles and logistical woes tied to efforts to provide student loans, unemployment benefits and other aid to hurricane victims.

Earlier Tuesday, Reid said that the total cost of recovery efforts would likely come in near $150 billion. DeLay said such estimates are premature.

Some lawmakers have discussed the possibility of eventually pursuing relief for businesses hardest hit by the hurricane, including airlines, shippers and farmers.

Agenda in flux

Meanwhile, the White House and Congress have re-ordered their agenda in an attempt to deal with the crisis. See full story.

Lawmakers, including leaders and top committee members, were scrambling Tuesday to come up with specific measures. Analysts said it was too early to gauge exactly how relief measures would be structured.

"Only after the situation in the lower Delta region is stabilized can officials accurately assess damage and then develop a realistic strategy for addressing human, infrastructural, and commercial needs," wrote Lehman Brothers policy analysts Kim Wallace and Rami Armon, in a research note issued Tuesday.

Katrina will set the Washington agenda, pushing everything else to the side until lawmakers develop a comprehensive relief plan, they said.

Sen. Jon Kyl, R-Ariz., the sponsor of the estate-tax proposal, said the move made sense in light of the urgency of the hurricane-relief efforts and expressed confidence the proposal would eventually gain passage.

Republicans have also planned to press for the extension of a number of Bush's first-term tax cuts -- a route that Democrats have charged would exacerbate deficits while ignoring the plight of those hardest hit by the hurricane.

"And it certainly is not a time when we would have a reconciliation that would give tax cuts at the highest end while not doing what we should do for all the people of our country," said House Minority Leader Nancy Pelosi, D-Calif., following the White House meeting. "We have an opportunity now to show that we are a government for the many, not the government of the few."

But Republican leaders said they would work to preserve Bush's tax-cutting agenda.

"The worst thing we could do is to increase taxes on the economy, an economy which has to be a major part of the [region's] recovery," DeLay told reporters.

In the aftermath of the hurricane, economists have revised down their estimates of second-half growth by around half of a percentage point, while boosting forecasts for 2006 as rebuilding efforts pick up speed. Sharply higher energy prices have added to jitters about the economic outlook.

So far, business groups haven't offered much of a wish list for lawmakers. And Congress has focused so far on criticisms of the federal government's response and aid directed at victims.

Utility taps officials

Nevertheless, the hurricane clearly devastated much of the infrastructure of New Orleans and portions of the Gulf Coast, prompting hard-hit utility firm Entergy Corp.
ETR, -0.43%
to begin tapping government officials in an effort to coordinate the rebuilding process.

"Our goal in all of these efforts is to help policy makers recognize and consider the longer term issues that must be addressed," said Leo Denault, Entergy's chief financial officer during a conference call with analysts on Tuesday.

The storm dealt a crushing blow to Entergy's power system, affecting 37,000 square miles, or roughly one-third, of the utility's service territory in the Gulf region. In its wake, the hurricane left 660 transmission lines, 223 substations, and 1,550 distribution lines knocked out, according to the New Orleans-based utility.

Entergy, the second largest nuclear generator in the U.S., delivers electricity to 2.7 million customers across Arkansas, Louisiana, Mississippi and Texas.

Beyond repairing electricity and natural gas lines, rebuilding New Orleans is a key issue for Entergy, which serves a wide customer base in the city - many who may not have homes and businesses to return to after the storm.

J. Wayne Leonard, Entergy's chief executive officer, has "communicated" with Commerce Secretary Carlos Gutierrez to discuss what "can and should be considered for the region to restore its economic viability," Denault said.

Additionally, Leonard and Curt Hebert, Entergy's vice president of external affairs, plan to approach congress and other federal officials to try to obtain "long term commitments," for things like coastal restoration, better emergency preparedness plans, and more efficient transportation systems, Denault said.

"These kinds of improvements will allow the city to be rebuilt with the assurance the infrastructure is in place to prevent such an event from ever happening again," Denault said.

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